Goldman Sachs has reiterated its "Buy" rating on Acm Research Inc. (ACMR.US), with a 12-month price target of $166. This valuation is derived from a 40x multiple on its projected 2030 earnings, discounted back to 2027. Based on the September 4 closing price of $74.44, this target implies a potential upside of approximately 123%.
The firm maintains a favorable view on the company's ongoing product portfolio upgrade towards more advanced equipment and the expansion of its ACM Planetary Family across areas such as cleaning, furnace, PECVD, and advanced packaging. Goldman Sachs forecasts that China's wafer fabrication equipment (WFE) spending will grow by 13%, 20%, and 15% year-over-year in 2026, 2027, and 2028, respectively, reaching $61 billion by 2028.
During Goldman Sachs' China AI tour event held in Shanghai on September 8, the firm invited the company's chairman for discussions, focusing on product expansion and differentiated equipment driven by AI chips, as well as the order outlook supported by China's WFE spending and the ongoing trend of domestic localization.
The company continues to expand its serviceable addressable market (SAM) through new SPE products, broadening its scope from cleaning equipment to areas such as electroplating, furnace, advanced packaging, coating and developing, and PECVD. This has driven its SAM from $7.4 billion in the global cleaning equipment market to $22 billion. Management is actively promoting SPE design innovation, which not only helps differentiate its offerings but could also foster the development of its own supply chain.
The company dedicates substantial time to foundational R&D and offers competitive product features. Potential innovations may include new structural designs, such as reducing the need for robotic arms to boost production efficiency or conserving sulfuric acid to enhance environmental friendliness. Other innovations could involve new designs for components like heat-related parts and nozzles. The company believes that generative AI is creating new demands for SPE, potentially reshaping the competitive landscape and favoring manufacturers with strong design capabilities.
Taking cleaning equipment as an example, generative AI may lead to smaller ICs and 3D structures, increasing the difficulty of cleaning processes. These new challenges could drive spec upgrades for cleaning equipment and result in higher average selling prices. Additionally, to accelerate yield improvement, customers may increase cleaning frequency, such as cleaning after every one or two process steps, which would further expand the SAM. Management expects that cleaning equipment spending as a percentage of overall WFE could rise from the current high single-digit level to a mid-teens percentage, and the company's strong R&D capabilities could help customers enhance their competitiveness and achieve success.
Regarding orders, the company remains optimistic about end-market demand, anticipating that year-over-year growth in on-hand orders during the second half of 2026 could outpace the first half. Cleaning equipment continues to be the primary contributor to on-hand orders, but electroplating equipment is growing the fastest, reflecting progress in new product expansion. Strong orders are primarily driven by growth in China's WFE spending, particularly in the memory and advanced logic sectors, while the continued localization trend also provides support. Management believes that the current localization rate for cleaning equipment is around 30% and could potentially rise to 50%-60% in the future.